Question
On January 1, 2017, Pharoah Corporation had retained earnings of $620,000. During the year, Pharoah had the following selected transactions: 1. Declared and paid cash
On January 1, 2017, Pharoah Corporation had retained earnings of $620,000. During the year, Pharoah had the following selected transactions: |
1. | Declared and paid cash dividends, $249,000. | |
2. | Earned profit before income tax, $810,000. | |
3. | Corrected a prior period error of $86,000, before income tax, which resulted in an understatement of profit in 2016. | |
4. | Reacquired 29,000 common shares for $53,000 more than the original issue price. This was the first time the company had ever reacquired its own shares. | |
5. | Completed a 3-for-1 stock split of the common shares. |
Pharoah has a 25% income tax rate and reports under ASPE. |
Prepare a statement of retained earnings for the year ended December 31, 2017. (List items that increase retained earnings first.)
PHAROAH CORPORATION Statement of Retained Earnings December 31, 2017Year Ended December 31, 2017Month Ended December 31, 2017 | ||
Excess Cost of Reacquired SharesCorrection for Understatement of 2016 Profit due to ErrorExpensesBalance, December 31Balance, January 1, as AdjustedProfit / (Loss)Total RevenuesCash DividendsRevenuesTotal ExpensesBalance, January 1, as previously reported | $ | |
AddLess :Total ExpensesExpensesProfit / (Loss)Excess Cost of Reacquired SharesTotal RevenuesBalance, December 31Balance, January 1, as previously reportedCash DividendsCorrection for Understatement of 2016 Profit due to ErrorBalance, January 1, as AdjustedRevenues | ||
Balance, December 31Balance, January 1, as AdjustedExcess Cost of Reacquired SharesBalance, January 1, as previously reportedTotal RevenuesCorrection for Understatement of 2016 Profit due to ErrorProfit / (Loss)ExpensesTotal ExpensesCash DividendsRevenues | ||
AddLess :Correction for Understatement of 2016 Profit due to ErrorProfit / (Loss)Total RevenuesExcess Cost of Reacquired SharesBalance, January 1, as previously reportedCash DividendsTotal ExpensesBalance, January 1, as AdjustedRevenuesExpensesBalance, December 31 | ||
AddLess : | ||
Profit / (Loss) Excess Cost of Reacquired Shares Correction for Understatement of 2016 Profit due to Error Cash Dividends Revenues Total Revenues Balance, December 31 Balance, January 1, as Adjusted Expenses Total Expenses Balance, January 1, as previously reported | $ | |
Balance, January 1, as Adjusted Balance, December 31 Excess Cost of Reacquired Shares Balance, January 1, as previously reported Expenses Cash Dividends Total Revenues Profit / (Loss) Correction for Understatement of 2016 Profit due to Error Revenues Total Expenses | ||
$ |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started